Markets Climb as Economic Data Outperforms: Inflation, Retail Sales & Earnings in Focus

Last week, equity markets continued to push higher, with both the S&P 500 and Nasdaq hitting fresh all-time highs. What’s driving the momentum? A combination of better-than-expected economic data, solid corporate earnings, and resilient consumer spending.

 Key Highlights:

Inflation remains manageable

• June CPI came in at 2.7% YoY, just above forecasts

• PPI surprised to the downside at 2.3%, despite rising tariffs

Inflation is still contained but could trend higher toward 3 - 3.5% if tariff rates continue climbing.

Retail Sales Beat Expectations

• Up 0.6% in June vs. expectations of 0.1%

• Consumers are still spending, especially on autos, apparel, and food services

This is a healthy sign, especially since consumption makes up ~70% of U.S. GDP.

Strong Start to Q2 Earnings Season

• 86% of companies reporting have beaten earnings estimates (vs. 10-year average of 75%)

• Financials are leading the upside surprise

While it’s early, full-year earnings growth is still tracking toward the mid-to-high single digits, with potential for double-digit growth in 2026.

Are Tariffs Still a Threat?

Possibly—but markets may be pricing in a more balanced view:

• Tariffs have risen significantly (avg. U.S. rate now 20.6%, highest since 1910)

• Yet inflation and consumption remain resilient

• Ongoing trade talks, easing export restrictions, and supply chain diversification offer reasons for optimism

Looking Ahead:

Markets are unlikely to rise in a straight line, particularly with seasonally volatile months and key tariff deadlines approaching. However, the probability of a worst-case scenario, marked by runaway inflation and stalled trade progress, appears low at this stage.

Pullbacks may offer opportunities for investors to reposition portfolios toward more stable growth into late 2025 and beyond. Current conditions continue to support a focus on U.S. large- and mid-cap equities, with selective exposure across sectors such as consumer discretionary, financials, and healthcare.

For guidance on navigating market volatility and aligning investment strategies with long-term objectives, Intrasia Wealth provides insights and solutions designed to help portfolios remain resilient, even as markets continue to climb walls of worry.